Tesla stock was down 4% in early Thursday trading. Post-election volatility is decreasing.
The small move comes despite a big target price bump. Thursday, Jefferies analyst Philippe Houchois raised his price target for shares to $300 from $195. He kept his Hold rating on the stock and even suggested Tesla management use the recent rally in Tesla stock to raise equity.
Tesla generates positive free cash flow. Wall Street projects free cash flow of $2.8 billion in 2024 and $5.4 billion in 2025. Free cash flow comes after investment spending. Tesla is expected to spend some $11.5 billion on plants and equipment in 2024. An equity raise doesn’t feel necessary at this point.
A target price bump of $105, or 54%, is significant and investors might expect a stock bigger reaction. Tesla shares, however, were up almost $80, or 31%, since the Nov. 5 presidential election coming into Thursday trading.
The rally took Tesla’s stock market value north of $1 trillion and Tesla’s stock price beyond current Wall Street targets. The average analyst price target of Tesla shares aggregated by FactSet is about $242, up from about $235 since the election.
To this point, Wall Street analysts have lagged behind investors in assessing the impact of the election on Tesla stock.
Thursday’s initial drop came after Tesla stock rose by 0.5% on Wednesday, following President-elect Trump’s announcement that Tesla CEO Elon Musk and Vivek Ramaswamy would lead a consulting-like effort at the newly created Department of Government Efficiency. It was the smallest move since the election. Tesla has risen six days and fallen once since Nov. 5. The average move, up or down, was 6%.
Investors like the big gains. At least smaller moves give them a chance to catch their breath.
Comments